I am a senior editor at Forbes, covering legal affairs, corporate finance, macroeconomics and the occasional sailing story. I was the Southwest Bureau manager for Forbes in Houston from 1999 to 2003, when I returned home to Connecticut for a Knight fellowship at Yale Law School. Before that I worked for Bloomberg Business News in Houston and the late, great Dallas Times Herald and Houston Post. While I am a Chartered Financial Analyst and have a year of law school under my belt, most of what I know about financial journalism, I learned in Texas.

Earlier this year I had an episode of unintended acceleration. I was moving my car at the iceboat ramp, wearing oversized Sorel boots, and suddenly the engine revved uncontrollably. It was one of those heart-in-the-throat, terrifying moments, as the engine snarled like an uncaged beast and I wondered if I was going to crash into another car or roar off across the lake. Then I realized my boot was pressing the accelerator and the brake pedal at the same time. I lifted my foot and the problem went away.

Now the Wall Street Journal reports Toyota is close to paying $1 billion to settle a federal criminal investigation into its alleged failure to report the alleged incidents of unintended acceleration that federal authorities have already concluded mostly resulted from operator error. This comes after Toyota agreed to pay more than $1 billion to settle private suits based on the novel theory that Toyota owners had suffered economic damages because their cars were worth less after plaintiff lawyers spread reports of an electronic defect that caused unintended acceleration. Which the government failed to find.

If this all sounds a little crazy, get used to it. We are now firmly in the era of regulation by legal intimidation, whether it is the government suing the big banks for losses on mortgage-backed securities that Fannie and Freddie helped promote with excessively lenient underwriting standards, or state attorneys general extracting $25 billion from mortgage servicers over foreclosure “fraud” that mostly involved failing to give defaulted borrowers as many options to try and restructure their loans as they felt entitled to.

Regulators, prosecutors and attorneys general have learned a valuable lesson from their private counterparts, class-action attorneys. Build a big enough case, and the target company will settle. The alternative can be fiduciary suicide: Risking the entire net worth of the company on a jury’s whim. The Oklahoma jury that determined it was Toyota’s fault that a 76-year-old woman crashed her car exiting the highway demonstrates the stakes. That verdict, if upheld to judgment, might have provided the precedent requiring Toyota to admit fault in thousands of other cases.

There’s a problem when government officials adopt this sort of regulation, however. It invites corruption of its own. The best example is the 1997 settlement state AGs negotiated with Philip Morris and the other big tobacco companies. One could be charitable and call the AGs merely incompetent for negotiating a deal that created a de facto cartel for the biggest cigarette manufacturers, instantly boosting their profitability, while generating a stream of hundreds of millions of dollars a year in fees for the private lawyers who initiated the litigation. But then there’s the fact that the Philip Morris et al also handed over more than $100 million to the AGs themselves, in payments to their professional association, the National Association of Attorneys General. NAAG (critics call it the National Association of Aspiring Governors) calls the money reimbursement of expenses or some such thing, but it’s the equivalent of paying a nice honorarium to the Policemen’s Benevolent Association just to make sure everybody keeps things fair.

This sort of coerced contribution is becoming common. A fight erupted in New York recently when Gov. Andrew Cuomo tried to grab New York’s $613 million share of a $13 billion settlement NYAG Eric Schneiderman and others negotiated with JPMorgan to settle mortgage claims. Cuomo’s demand was entirely reasonable: Do we really want state prosecutors to demand settlement money from their targets, then decide how to spend it? Self-financed prosecutors, like towns that pay the bills with traffic tickets, are not a good idea over the long haul. Better to hand the money to the legislature, which at least has a democratic process for allocating money.

But the governor folded after the state solicitor general noted that Cuomo, as AG, had kept similar settlement proceeds. As noted by Capital Confidential, the former AG had steered $90 million in insurance settlements to a not-for-profit organization selected and overseen by his office, to establish and operate a health care reimbursement database, as well as “consumer education efforts.” And an earlier, $13.5 million settlement of student-lending claims lay mostly unused at the AG’s office until Cuomo’s last day on the job, when he graciously awarded it to the New York Public Interest Research Group.

The potential for petty corruption here is huge. Who’s to know whether a staff attorney in one of these organizations is in a position to dial up or dial down demands based on the prospects for a paying job after his or her public-service turn is over? Who’s examining the non-profits who get this money to make sure they aren’t staffed with political supporters? It’s all reminiscent of the ethically challenged practice known as cy pres, where judges award money that will never be distributed in class actions to non-profits that they and plaintiff lawyers select. Is it paranoid to suspect that money sometimes goes to organizations that benefit in some way the people who are handing it out?

Finally there is the well-known problem of regulatory capture. Once prosecutors and regulators get used to tapping the companies they oversee for huge amounts of money, it can become a habit. And like most habits, it can become addictive, shifting power to the entity that supplies the juice. I wonder if that process is occurring with too-big-too-fail banks, which have become milk cows for Washington. It definitely happened with the tobacco settlement, where the cigarette companies reshaped the industry to their advantage. Is the auto industry next?

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The problem is not only that they are wrong in their charges, but that when innocent victims of government accusations by cases built on the imagination of lawyers, undermine our law of the land and create an atmosphere in business of corruption encouraging dishonesty. This is the epitome of corruption. What incentive does an honest businessman have to follow the law if his efforts are undermined by the very check he has to counter his corrupt competitor. The federal government should step in and stop this case from going through. I now question whether honesty, integrity and correct practices have anything to do with success in our America. What incentive does GM have in supporting a fellow automaker’s rights even though it may happen to them. None. What incentive does any business have in going against federal prosecutors when they themselves may become a target of this corrupted process. This jeopardizes the United States and its financial strength. It looks like we are not gong to be destroyed by bombs, it looks like we will destroy are self.

Joe, SUDDEN UNINTENDED ACCELERATION is real, it is not the imagination of lawyers like you are calling it. It happened to me and I am completely DISABLE after having 24 surgeries on both of my legs due to my Lexus going 120 miles an hour back in 2005. There are 45o cases out there of people who got injured or died, how could 450 people be making up stories? I am glad that we have lawyers protect us from big corporations who only think about their pockets.

I am 65 and recently bought a pair of Sketcher Sport shoes. They are great shoes, but have a very aggressive sole that is somewhat wider than the shoe itself. I drive a 5-speed Subaru, and frequently find myself snagging the edge of the wrong pedal. It hasn’t caused any accidents or scary moments, but I can see how it easily could. Upon inspection, I found that they are considerably wider than what I was previously wearing, so it requires a little bit more caution.

Corporate-controlled police state’s effort to whitewash the Recall King with yet another “deal” where Toyota admits to no wrongdoing. And the presstitute media continues the blackout of renowned software expert Michael Barr’s recent findings that Toyota’s software has bugs which cause sudden unintended acceleration. Mr. Barr’s findings – prompting the guilty verdict in the sudden unintended acceleration case in Oklahoma – are the REAL story behind Toyota’s sudden interest in shuttin’ things up – er I mean reachin’ a “settlement.” I’ve been blogging about the Recall King for quite some time. Search “Beware of Toyota. Their next victim may be YOU…”

I love people who think journalists will ignore a juicy, career-enhancing story because …why, exactly? Somebody paid them off? Every one of them? Perhaps it’s because most journalists realize that highly paid expert witnesses may be convincing in court, but their stories don’t hold up so well in the real world of critical examination.

Thank you for writing this Daniel. I’m still amazed at how much Toyota has had to pay for a problem that doesn’t exist. I wish there were more folks in the media such as yourself. The main-stream media was a huge problem for Toyota in the first place, since the majority never gave the whole story and simply threw them under the bus. Keep up the good work!